World Poker Tour's Fourth Quarter Losses Mount
This week, World Poker Tour Enterprises (WPTE) reported higher losses in the final quarter of 2008. The producer of televised poker tournaments reported a net loss of $3.3 million for the fourth quarter of 2008, contributing to a loss of $12.5 million for the full year. This represents a weakening of the company's financial performance over the prior year, when it posted a loss of $1.8 million in the fourth quarter of 2007 and a loss of $7.4 million for the full year.
The company reported $2.5 million less in revenues for the quarter compared to the same period a year ago, primarily driven by a change in the release pattern of its television broadcasts and lower international television license fees. While the company has shed personnel in an effort to reduce costs, some of that financial benefit was offset by the $927,000 the company spent to produce ten episodes of its ClubWPT.com television series.
The highlights of WPTE's fourth quarter included adding FullTiltPoker.net as a domestic sponsor for Season VII of the WPT television series. The company also successfully produced the second season of the WPT China National Traktor Poker Tour. The fourth quarter, though, also saw the demise of the WPT-branded online gaming site.
During an earnings conference call, WPTE acknowledged that its subscription-based gaming site, ClubWPT.com, fell short of achieving the 16,000-20,000 subscribers it had targeted for year's end. During the company's earnings conference call, it was reported that at the end of 2008, the site had 12,000 subscribers, with approximately 3,000 of those still in trial memberships.
The company also reported that it was seeking a strategic partner to invest in its WPT China business, stating that "The cash needs to support the growth in this business are greater than the Company is willing to expend. The level of 2009 business activity by the WPT China business is dependent on the outcome of that search."
During the call, Lipscomb said, "I want to emphasize that we have taken significant steps to right-size our Company and turn the business around. This is never easy to adapt when your primary eight-figure source of revenue disappears because of market pressures that are entirely outside of your control, and while our metamorphosis is by no means complete, we believe that we are taking the necessary steps to reposition WPTE for long-term profitable growth. The actions we have already taken make us more agile and capable of adapting to an ever changing market, one that we have played a significant role in creating."
Just prior to the company's financial release, WPTE announced that it had reached an agreement with FSN to air an eighth season of the WPT television series. The company also announced last week that its Board of Directors enhanced provisions for the company's CEO and President Steve Lipscomb in the event the company was sold in 2009. Under the provisions, filed with the Securities and Exchange Commission, Lipscomb would receive 5% of the gross proceeds of the sale of the company, less the fair market value of its assets. Lipscomb has also been granted a six-month severance package in the event of his employment termination. And the company has arranged for an exchange of 600,000 of Lipscomb's currently valueless stock options for 500,000 options set at current market prices.
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